CUTTING THE GORDIAN KNOT

AFTER THE FEDERAL GOVERNMENT BEGAN RESTRICTING FUNDING FOR STEM-CELL RESEARCH, A NUMBER OF STATES JUMPED IN TO TAKE UP THE SLACK, BUT A LACK OF COORDINATION AMONG STATES COULD LEAD TO LIMITED RESULTS.

WHEN California voters passed a $3 billion ballot initiative in November to pay for stem-cell research, little did they know that they would ignite a firestorm of copycat measures in statehouses across the country. In the months after the initiative was approved, law-makers in Wisconsin, Illinois, New York, and New Jersey, among others, proposed their own stem-cell research programs, worth up to $1 billion, out of fear that scientists at their universities would follow the money and head west.

The state efforts were aimed at trying to fill a void left by the federal government in 2001, when President George W. Bush restricted funds from the National Institutes of Health for stem-cell research. "We can't just sit around and wait for the administration to change its policy," said Lawrence S.B. Goldstein, a neurobiologist at the University of California-San Diego, last fall during the campaign for the stem-cell initiative. "At some point, the states have to take the lead in this area."

And not just on stem-cell research. Frustrated by the slow growth in federal research funds and the inability of their small universities to snag a bigger piece of that federal pie, states are increasingly becoming more aggressive about providing their own dollars for research.

To be sure, the state dollars are still small compared with what the federal government provides, and most of the state money is geared toward applied research that can pay economic dividends rather than the basic research the federal government tends to fund. Even so, the trend of states taking the lead in setting research priorities concerns some scientists, including engineers, who worry that state lawmakers may be interested only in current fads, such as stem-cell research, as well as quick results.

"The federal government tends to take the long view on research," says B. Jayant Baliga, a professor of electrical engineering at North Carolina State University. "States have less patience, so there is a danger that if something good is not coming out of the research they are funding, they will give up after a few years."

Case in point: The Microelectronics Center of North Carolina (MCNC). Founded by North Carolina in 1980 in Research Triangle Park, the center was created to help attract the semiconductor industry to the state, which at the time was reliant on manufacturing. The state invested more than $200 million in the center but was never successful in luring semiconductor companies. "We did bring in a lot of companies in related fields, like IBM," Baliga said. "But in the end, the state came to the conclusion that the center was not sufficient to attract what it wanted."

So about five years ago, the MCNC was spun off into an independent entity free of any state control and, of course, public dollars. "I was using it for my research, and they cut us all off," Baliga said.

Not only is the federal government likely to stick to a research agenda for the long haul, but Baliga and other experts say federal agencies are better able than states to ensure that the wealth is spread around. "States have to balance their budgets, so they can't just pour money into losing efforts," says Bill Drohaun, executive director of the Association of University Related Research Parks, which in many places are incubators for state research programs. "The federal government runs a deficit, so it can take more chances on research."

While there is a lot of disagreement among scientists about the fairness of how federal agencies dole out their money through the peer-review process - which some believe favors more established institutions with vast research facilities and big budgets-even critics concede that in the end, small states have the capacity to conduct research only because of the federal government's investment.

But when states take the lead in funding research, the spoils are more likely to go to the big states with their large budgets. One example is California's $3 billion stem-cell initiative. Another is a deal New York has put together over the past several years that has siphoned some $850 million dollars for nanoscience research at the State University of New York-Albany.

The effort began in 2001, when IBM and New York agreed to spend $150 million dollars to upgrade facilities. The following summer, International Sematech, a consortium of 12 semiconductor makers, pledged to spend $193 million over five years to build a center that would research faster microchips. After the state agreed to put forward another $210 million, Tokyo Electron Ltd., a Japanese company that builds tools used to make microchips, said it would build its own research center in Albany.

The infusion of cash led state officials to dream that Albany would become the next Austin, Texas, where an economic boom was spurred in part by Sematech's decision in 1988 to locate its headquarters there.